Can You Explain Statement In Lieu Of Prospectus?

A statement in lieu of prospectus.According to the companies' ordinance if a public company is not issuing a prospectus on its formation, it then must file a statement in lieu of prospectus with the registrar of the companies. A statement n lieu of prospectus is defined as:

"A public document prepared in the second schedule of company's ordinance by every such public company which doesn't issue a prospectus on its formation with the registrar before allotment or shares of debentures, and signed y every person who is named therein."
A statement in lieu of prospectus gives practically the same information as a prospectus and is signed by all the directors or proposed directors. In case, the company has not filed a statement in lieu of prospectus with the registrar, it is then not allowed to allot any of its shares or debentures.

A statement in lieu of the prospectus contains the information as described below:-
1- Name of the company
2- Statement of capital
3- Description of the business
4- Names, addresses, and occupation of directors
5- Estimated initial expenses
6- Names of vendors and details of property
7- Material contracts
8- Director's interest
9- Minimum subscription

A public limited company is allowed to invite public for subscription, and for the shares of the company, they also invite the general public to invite the debentures and other kind of investments. But even a public limited company need not necessarily go to public for money. The promoters may raise the necessary capital through private source. In such a case there is no need of issuing prospectus to the public. The promoters are required to prepare a document called statement in lieu prospectus and file the same with the registrar.

Content:

Following are the main content of statement in lieu of prospectus.

• Name of the company.
• The authorized capital and its division into shares.
• Nature of business and objectives.
• Name, address and occupations of

1. Directors or proposed Chief Executive
2. Chief Executive or proposed Chief Executive
3. Managing agents or proposed managing agents, if any.
4. Secretary or proposed secretary
5. Auditors
6. Legal Advisor

• Any provision regarding the appointment and remuneration payable to above mentioned persons.
• Estimated amount of preliminary expenses.
• Details about the company contracts
• Amount of minimum subscription
• Signature of directors or proposed directors or their agents authorized in writing.

In case companies can raise the entire capital through their acquaintances, they need not prepare a prospectus and issue to public the same. However they must file with the registrar a statement in lieu of prospectus at least 3 days before alloting shares to the members. This statement should also contain all the information as would be given in the prospectus.